Judge: transcoding doesn’t block Veoh “safe harbor” defense

Universal Music Group says that user-generated content sites like Veoh can't …

On December 29, video-sharing site Veoh won another legal victory after Universal Music Group sought to keep the company from using a "safe harbor" defense against copyright infringement. A federal judge has rejected such pleas.

The famed "safe harbors" of the Digital Millennium Copyright Act come with caveats. For instance, safe harbor is granted only in situations where copyright is infringed "by reason of the storage at the direction of a user." But when video-sharing sites like Veoh transcode upload videos to ready them for streaming, they aren't doing so "at the direction of a user" and they aren't simply "storing" the file anymore. Does automated transcoding of uploaded works eliminate the safe harbor defense?

Universal Music Group says yes, and it sued Veoh back in 2007 over the issue. UMG objected to the presence of its music videos on the site, though it admits it never sent Veoh a single takedown notice.

That's apparently because UMG doesn't want a situation to develop in which it needs to spend legal resources monitoring every new user-generated content site that springs into existence. Instead, it wants such sites to take proactive provisions, such as automated filtering of copyrighted works, and its claim that Veoh doesn't qualify for a safe harbor is part of that overall strategy.

It's a common gambit of content holders (see: Viacom's $1 billion lawsuit against YouTube); the legal rules governing this brave new Internet world are still being worked out in court decisions across the countries, and content owners would love to shape the emerging body of case law in such a way that it reduces the amount of work they have do to keep their content under control.

But with regard to safe harbor claims, it is UGC sites like Veoh that are racking up important legal wins.

Transcoding is "safe"

Universal asked the judge in the case against Veoh for a partial summary judgment that would bar the site from using "an affirmative defense under one of those safe harbors." In other words, the case would continue to trial, but Veoh would already be barred from claiming a DMCA safe harbor as its defense. The judge rejected the idea.

Universal claimed that Veoh did not quality for a safe harbor because of four actions it undertook after receiving an uploaded video: converting it into Flash format, "chunking" videos into 256KB pieces, prepping videos for streaming, and prepping videos for download.

At their heart, each of these claims is about automated processing after an upload. Universal says that the DMCA only covers files "stored" at a user's direction, but Veoh argues that the actual language of the statute covers infringement produced "by reason of the storage." The transcoding was simply done in order to make the stored file accessible to visitors.

As the judge noted, "If providing access could trigger liability without the possibility of DMCA immunity, service providers would be greatly deterred from performing their basic, vital and salutary function—namely, providing access to information and material for the public." Veoh's reasoning was therefore "correct for several reasons."

The judge refused to go further and positively state that Veoh qualified for a safe harbor. "The Court may not do so until Veoh has shown that it has met the other requirements of that [DMCA] section (e.g., that it does not receive a financial benefit directly attributable to the infringing activity."

Veoh might not qualify for a safe harbor in the end, but the judge's ruling makes clear that automated processing of UGC won't be the reason for any disqualification. This is crucial; as the Electronic Frontier Foundation's Fred von Lohmann notes in his analysis of the case, "If the court had accepted UMG's arguments, every web host would lose the safe harbor as soon as it made web pages available to the public. The ruling should also help YouTube in its ongoing battle with Viacom, which also turns on the continuing strength of the DMCA safe harbors."

Veoh has already won a similar ruling in a different case, this one brought by porn producer Io. In that case, a judge ruled in August 2008, after some consultation with Wikipedia, that the specific conversion of uploaded videos into Flash did not disqualify Veoh from a safe harbor.

In a statement sent to Ars Technica, Veoh said, "We are gratified that the court has denied UMG's attempt to bar the use of safe harbor afforded to us under the copyright laws. We have always believed that Veoh is operating clearly within the bounds of the law and demonstrates the utmost respect to all copyright owners."